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Goodwill and Impairment

About the project

Goodwill is an asset recognised on an acquirer’s balance sheet in a business combination when the consideration paid for an acquiree exceeds the fair value of the acquiree’s identifiable net assets. It is measured as a residual (the excess of the amount paid over the fair value of the identifiable net assets), and represents the future economic benefits arising from other assets acquired that are not individually identified and separately recognised. Goodwill is subsequently measured at historical cost and written down under the requirements of HKAS 36 Impairment of Assets in the event of impairment.


Following its Post-implementation Review of IFRS 3 Business Combinationsthe International Accounting Standards Board (IASB) began a research project on goodwill and impairment with the objective to explore whether entities can provide users of the financial statements with more useful information regarding acquisitions at a reasonable cost. The IASB is considering:


  • improving disclosures to allow investors to assess whether a business combination is a good investment decision and whether, post-acquisition, the business is performing as expected at the time of acquisition;
  • simplifying the accounting for goodwill; and
  • improving the calculation of value in use in the impairment test.

The IASB published its preliminary views in a Discussion Paper Business Combinations -– Disclosures, Goodwill and Impairment in March 2020, and is now seeking public comments.


The Hong Kong Institute of Certified Public Accountants (Institute) has an active goodwill and impairment project, and is carrying out various activities to drive local and global discussions on the accounting for goodwill, including:


  • Working closely with other national standard-setters, including with the staff of the Accounting Standards Board of Japan (ASBJ) on a joint Research Paper Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study (details below).
  • Issuing an Invitation to Comment on the IASB Discussion Paper Business Combinations -– Disclosures, Goodwill and Impairment, with comments due to be received by 7 August 2020 (details below).
  • Conducting various other forms of outreach to solicit views from stakeholders, including a forum with local investors and analysts and discussion at the International Forum of Accounting Standard Setters meeting in October 2019.

Research Paper

Staff of the Institute published a joint Research Paper with the staff of the ASBJ on 24 March 2020 with the objective to:


  • Share new findings from an updated quantitative study on goodwill.
  • Analyse the existing accounting requirements for goodwill.
  • Explore alternative views on the subsequent accounting for goodwill.


Please refer to Research Paper Goodwill: Improvements to Subsequent Accounting and an Update of the Quantitative Study for details.


Invitation to Comment

The Financial Reporting Standards Committee (FRSC) of the Institute is seeking comments on IASB Discussion Paper DP/2020/1 Business Combinations–Disclosures, Goodwill and Impairment. Please refer to the Open for comment documents of our webpage for details. Comment due date extended to 14 November 2020.


Recent and upcoming activities 

A Plus articles 
Goodwill: improvements to subsequent accounting
Settling the Standard 


Accounting Standards Advisory Forum
The Institute presented its Research Paper to IASB members and national standard setters during Accounting Standards Advisory Forum (ASAF) meeting in March 2020. 
Next steps
The Institute will be assessing feedback received on the Invitation for Comment on IASB Discussion Paper DP/2020/1, and is planning various other forms of outreach to solicit views from stakeholders.


The Institute is hosting a roundtable on the Discussion Paper on 6 October 2020, and invites interested parties to come and share their views on the accounting for goodwill and disclosures for business combinations. Please refer here for details and registration.


Other useful resources

IASB Goodwill and Impairment project page

FASB Goodwill project page




Last updated: 6 July 2020